* Brazil consumer inflation seen hitting fastest pace in 12 months * Latam currencies weighed down by weak Wall St session * Brazil real gains 0.5 pct, Mexican peso 0.6 pct higher By Natalia Cacioli SAO PAULO, Feb 6 Brazil's short-dated interest-rate contracts rose on Wednesday to their highest level in at least two months on speculation that rising inflation could force the central bank to tighten monetary policy, while most Latin American currencies lost as a Wall Street rally paused. Economists estimate that Brazil's benchmark IPCA consumer inflation index, which will be released early on Thursday, accelerated in January to its fastest pace in 12 months despite a faltering economic recovery, a Reuters poll showed. "The market continues to see high inflation, and that would result in higher interest rates, specially if the economy recovers," said Ures Folchini, a treasury vice president at WestLB bank in Sao Paulo. Interest-rate contracts maturing in January 2014, one of the most traded, jumped 5 basis points to 7.33 percent -- the highest level since the end of November. The contract expiring in January 2015 also climbed 5 basis points to 8.07 percent, on track to close at its highest point since early October. Despite a rally in Brazil's domestic rates, most analysts still expect the central bank to resort to non-conventional measures to curb inflation, leaving the base Selic rate at its current all-time low of 7.25 percent during 2013. Most Latin American currencies fell as a Wall Street rally ran out of steam, curbing investors' appetite for taking risk in emerging markets. Leading losses in the region was the currency of Mexico, whose economy heavily relies on the performance of its northern neighbor. The Mexican peso lost half a percentage point to 12.70 per dollar. Concerns about high asset prices and a weak global economy are likely to limit gains in Mexico's peso this year, although a chance of a ratings upgrade could boost the currency, a Reuters poll found. The Brazilian real lost a more modest 0.1 percent, however, as investors feared any sharp moves could trigger a government intervention in the foreign exchange market. "This week the exchange rate is stuck between 1.98 and 1.99 per dollar and it is likely to remain like that," said Celso Siqueira, manager of the currency desk at Advanced brokerage in Sao Paulo. Economists expect the real to hover around the 2 per dollar mark for the whole of 2013 as the government tries to support exporters without creating additional inflation pressures, a Reuters poll showed. Latin American FX prices at 1815 GMT: Currencies Daily YTD pct pct change Latest change Brazil real 1.9871 -0.13 2.66 Mexico peso 12.7000 -0.55 1.29 Chile peso 472.5000 0.06 1.31 Colombia peso 1791.4500 -0.25 -1.42 Peru sol 2.5770 0.00 -1.01 Argentina peso 4.9850 0.00 -1.45 Argentina peso 7.6800 -1.17 -11.72
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